New Orleans Saints

Later today Jimmy Graham will sign a four year, $40 million contract that will make him the highest paid tight end in the NFL. The $10 million a year average surpasses the prior high contract value for the position of $9 million per year which was set by the Patriots’ Rob Gronkowski in 2012. The question now is whether or not this contract is a game changer for the position and what impact it will have moving forward.

The NFL has long valued the tight end position as far inferior to the wide receiver position- the average value of the top five at each position is just $7.6 million compared to $13.7 million. Graham’s contract will now be the first to move the tight end closer towards the top of the wide receiver market. His $10 million annual value will rank 7th among receivers, tied with Brandon Marshall of the Chicago Bears.

However, when we discuss the actual effect of the contract on the entire market, the devil really lies in the details. In the NFL no multi-year veteran contracts are fully guaranteed. When we determine the real impact a contract may have on other negotiations in the future we need to know the timing of the cash flows and the structure of the salary cap charges to determine the likelihood that the contract will actually be earned. If the final year of Graham’s contract were to contain $15 million in cash payments then the $40 million number is worthless to any future negotiations because the odds of that final year being earned by the player are miniscule.

The three year cash flows of the contract do not indicate a contract that will necessarily be a game changer of a contract. Graham’s first year payout is tied for second among elite tight ends. His 2nd year payout is just slight above what Antonio Gates and Vernon Davis signed for in 2010. The three year total just matches that of Gronkwoski. These contracts were all signed at a time when the cap was certainly lower than it is now.

The basic components of the contract are very much in line with the existing tight end market and do not reach upwards until the fourth year. The top players from this group received about 85% of their four year cash value in the first three seasons. Graham will receive just 75% of it. The difference here is a big consideration when we look at the impact of the deal.

Had he received the 83-85% payment, his three year total would have been around $34 million. That is groundbreaking. Not only does that far surpass anyone on the market, but it would have put him just $2-$3 million shy of the elite (by salary) wide receiver grouping of Vincent Jackson, Dwayne Bowe, and Mike Wallace. Those players all earn $11+ million a season. Had he received closer to that figure I think we would have finally had a clear niche defined for the pass catching tight end, a subject that has become a big topic of debate over the last few years. .

I’d consider Graham’s contract slightly stronger than Gronkowski’s since Gronkowski had to survive five years of NFL play (and hes been hurt through most of the first two of those seasons) to get his three year total. Graham needs only to survive three years. This is because Gronkowski signed a contract with two years remaining on his rookie contract. Graham will also earn more over the first two years than Gronkowski.

But Graham does not have great protection in his contract. According to Pro Football Talk, Graham will receive a $12 million signing bonus on his deal. Assuming no voidable years were used that would leave New Orleans with just $6 million in dead money in 2016 and $3 million in 2017 if they wanted to release him. Both are workable numbers, especially the 2017 number. With a $10 million salary in 2017, I would consider that $40 million number to be in great jeopardy and, quite frankly, its only that $10 million salary that makes this a contract that stands far apart from anyone else at the position. Without it this is no different than where things stood before.

Some have questioned the years of the contract. I believe that served two purposes. One is that if Graham continues to be a spectacular player, it would allow him a chance to cash in on another contract. This is in stark contrast to others like Vernon Davis who have realized there is no future money available to them because of the contracts they signed when they were younger.

Secondly it made for an easier negotiation for New Orleans. New Orleans has become a market setting team in recent seasons. Drew Brees, Jairus Byrd and Jahri Evans were all market movers. They were here as well, but Graham was looking for high end receiver money. They could compromise with a $10 million annual value, but if they extended that contract into five and six year territory they would have had a much more difficult time justifying the contract and also would have had to include a higher guarantee to make up for more seasons. $40 million over 4 years more or less split the tight end and wide receiver salaries over that time frame. To do the same over five years would have required a much bigger disparity between tight end and Graham’s salary.

My guess is Graham accepted this contract with a strong conviction that the Saints can not keep him on the salary cap in 2015 at an $11 million cap charge and will thus add voidable contract years and restructure the contract. New Orleans has the worst cap outlook of any team in 2015 and they do use voidable years so this is a reasonable assumption. If they were to make that move then he might earn the full $40 million. Without it he is going to have to perform at a very high level, much higher than most tight ends do after that many seasons in the NFL.

Graham does receive about $6 million more over the next two years (mainly all coming in 2014) than he would have by playing the franchise tag game. That’s his big benefit. Thus far the Saints will receive no effective cap relief on the contract. Had they tagged him twice he would have counted for $15.5 million against the salary cap. Now he will count for $15 million. I have to believe that from their perspective they feel that this was a discount over playing the three year tagging game which would have cost them around $33.5 million in cash and cap. Now they will pay $30 million in cash and $27 million in cap over the same timeframe. That may indicate something about the window of opportunity the team sees for itself, which would also coincide with the expiration of Brees’ contract. If they do not restructure the contract it strongly indicates a three year plan in place.

But overall I don’t view this deal as a transcendent contract the way many are. Its not a paper contract, but its not something that separates that much from what is out there. Like Gronkwoski’s deal a few years ago, there is no guarantee that the big money is ever unlocked in the contract. Without unlocking those years it doesn’t change the real structure of the tight end market. It’s a small step forward, but not the giant leap many think it is.

Any minute now, arbitrator Stephen Burbank will hand down his decision re: Graham v. New Orleans–the highly publicized franchise tag grievance filed by Jimmy Graham and his agents. Burbank’s ruling will have a vast impact on a variety of parties, so here’s an in-depth look at the entire situation and the carryover effect that the decision could create.

The Facts:

The Saints placed the $7.053 million non-exclusive tight end franchise tag on Graham back on February 28th.

On May 8th, Graham, who lined up out wide or in the slot for 67% of his 2013 snaps, filed a grievance to be compensated $12.312 million—the non-exclusive franchise tag for wide receivers.

The grievance hearing took place on June 17-18, and a decision is expected later this week.

Scenario 1: Graham is ruled a tight end

Salary cap implications:

If Burbank determines that Graham is a tight end, nothing changes. His 2014 cap hit will remain at its current $7.053 million, and New Orleans will remain under the 2014 salary cap.

Long-term implications:

Franchise tagging a player two years in a row results in a 120% increase in salary from Year 1 to Year 2. If New Orleans wins the grievance, they could essentially lock in Graham for a combined $15.5 million over the next two seasons—an absolute bargain for one of the games best weapons. The Saints would gain a tremendous amount of leverage in long-term contract negotiations if Burbank rules in their favor.

Most likely outcome under this scenario:

Graham, who turns 28 in November, is surely aware of the above. As a late third rounder who’s made just over $3 million during his four NFL seasons, he’s greatly incentivized to sign a set-for-life type of contract as soon as possible. While this outcome will leave the Saints with no reason to pay Graham the type of money he wants (reportedly over $10 million annually), there’s no questioning both sides mutual desire to come to terms on a long-term deal. Graham will be disappointed, but these circumstances favor a long-term deal being reached before the July 15 deadline.

Scenario 2: Graham is ruled a wide receiver

Salary cap implications:

If Graham is rewarded the $12.132 million non-exclusive receiver franchise tag, the Saints will have to act quickly. Currently just $1,588,821 under the salary cap, this ruling will force New Orleans to make cuts or restructure current contracts in order to get back under the cap. Otherwise, they could choose to remove the tag.

Long-term implications:

120% of $12.312 million is $14.774 million, and the Saints currently have one of footballs most unfortunate cap situations. All negotiating leverage would shift to Graham if he were deemed a receiver.

Most likely outcome under this scenario:

An aging Brees and a host of offseason moves that scream “win-now” point towards the Saints making the necessary corresponding moves to keep Graham and get under the cap. However, my money is on this outcome leading to the Graham camp tabling negotiations, agreeing to play the 2014 season under the $12.312 million tag, and taking their chances as a free agent again in 2015.

Scenario 3: A hybrid ruling

Salary cap implications:

It’s possible that Burbank decides to rule in the middle—designating Graham a hybrid WR/TE. The halfway point between $7,035,000 and $12,312,000 is $9,673,500. As in scenario 2, this ruling would still push New Orleans over the cap, though not by much.

Long-term implications:

120% of $9,673,500 is $11.6 million—a substantial difference from the $14.774 million number in scenario 2. With the Saints’ poor cap situation, the $3.1 million difference (when compared with Graham winning the grievance) of placing a second franchise tag on Graham will certainly impact make New Orleans’ willingness to negotiate.

Most likely outcome under this scenario:

Drew Brees recently commented that Burbank told him what his ruling would be. Brees also said “there’s a fair way to do this”. Was he insinuating that a middle ground would be fair? It’s certainly possible. Brees badly needs his most dangerous weapon, and could already be talking to management about pushing some of his own salary forward to not only create the necessary cap room in the present, but also propel a long-term deal. However…

Appeal Process :

A wildcard in all of this is that the losing party will inevitably appeal Burbank’s ruling. As noted by ProFootballTalk’s Mike Florio, a decision on the appeal may or may not be made before July 15—the deadline for player and team to strike a long-term deal.

Graham’s True Worth & The Future of the TE position

Tight ends salaries have grown at a tremendous rate over the past several years.

Avg. Top 5 Cap Figures of NFL TEs

NFL Salary Cap

% of Cap Comprised By Top 5 TEs

2005

$2.3 mil

$85.5 mil

2.70%

2006

$3 mil

$102 mil

2.90%

2007

$3.4 mil

$109 mil

3.10%

2008

$3.3 mil

$116 mil

2.90%

2009

$4.7 mil

$123 mil

3.80%

2013

$8.3mil

$123 mil

6.80%

2014 (Graham TE)

$7.8mil

$133 mil

5.90%

2004 (Graham WR)

$8.8 mil

$133 mil

6.60%

In 2005 & 2006, the average cap hit of the leagues top five tight ends accounted for less than 3% of the NFLs salary cap. By 2009, with a $123 million salary cap, that figure had increased to 3.8%. Last season, with the salary cap still at $123 million, it was up to 6.8%.

On the surface, this makes sense. The NFLs shift towards a pass-first league theoretically increases the value of skill-players who can catch the ball. However, production from the top of the tight end position has not grown along with this salary increase.

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Shown above is the average production of the top-5 tight ends since 2005, in terms of Yards,TDs and AV (Approximate Value, a ProFootballReference created statistic that attaches a single number to every player season). While touchdown production from the tight end position has increased over this period, yards and AV have remained constant.

Tight end salaries (as a percentage of the salary cap) have likely hit their ceiling, meaning they’re due to plateau in the near future. If Graham loses the grievance and signs an extension before the July 15 deadline, the beginning of a period where tight end salaries decline may begin.

But Graham—a once-in-a-lifetime type talent— is not just any tight end, which is why this ruling holds so much importance. If Graham wins the grievance and hits the open market in 2015—a year where the salary cap is projected to increase—there’s no telling how much money he might get.

And it’s that hypothetical—the prospect of a still-in-his prime Graham hitting the open market in 2015, that ultimately has agents drooling. Not just Graham’s agent, Jimmy Sexton–one of the games most powerful negotiators. But the agents of all tight ends, as the deal Graham signs will be used as a benchmark for tight end deals of the future.

A situation that has been in-flux for months will begin to take shape in the coming days. And it all resides in the palms of one man: arbitrator Stephen Burbank.

I think the sentiment across the board about Jimmy Graham has pretty much been “why can’t the Saints get a deal done rather than resorting to the franchise tag process”. It looks worse for the Saints in this case because technically Graham plays a low cost position so his franchise tag value is low compared to what any other position on offense would receive. There have been few better values in the NFL than Graham from a cap versus performance perspective and one would assume that ownership would see the numbers that Graham puts up and pay him accordingly with little hassle. So I thought we could take the Saints side of the argument here and look at a few considerations.

The Future Performance Factor

While players usually get paid for what they have done in the past, specifically when moving to a new team, the NFL team will almost always need an eye for the future. Due to the salary cap considerations a bad contract (or at the least an overvalued one) lessens the margin of error that a team may have in the draft or when evaluating other potential signings.

Now I admit it is hard to find comparable players to Graham, but we’ll do the best we can here within his position. Graham ranked in the top 3 in receptions, yards, and touchdowns for a Tight End in three of his first four years in the NFL. That’s pretty much unheard of. In terms of yardage and touchdowns Antonio Gates did that in three of his first four years, though he just missed out on the receptions. Since 1990 I think that Gates was the closest of anyone.

Using yards as a baseline I looked for any players who finished top five at TE for at least two of their first four years in the NFL starting in 1990. There were 11 other players besides Graham who matched the criteria. Those players were Ben Coates, Antonio Gates, Tony Gonzalez, Eric Green, Todd Heap, Freddie Jones, Randy McMichael, Johnny Mitchell (???), Shannon Sharpe, Jeremy Shockey, and Kellen Winslow, Jr.

Because Mitchell was a head case and seemed to quit the NFL every time he said he wanted to play I pulled him out from the group. I wanted to look at the players’ average stat line for their best two years and then determine the percentage increase or decrease that they saw over the fifth through ninth years of the contract, the years that would represent a five year contract extension for Graham. Here was the average group performance (Year 9 was adjusted to remove Winslow and Green who were both essentially out of the NFL):

Season

Games

Rec.

Yds.

TD

Year 5

-3.5%

-7.2%

-14.0%

-3.6%

Year 6

-1.2%

-17.3%

-25.4%

-16.0%

Year 7

-20.9%

-29.6%

-31.8%

-29.1%

Year 8

-3.7%

-15.9%

-21.4%

-34.4%

Year 9

-4.3%

-31.5%

-36.5%

-28.2%

The expectation is that the final “prime” type season for the position would likely be the fifth year of the contract, or in this case the franchise tag season. The declines are relatively consistent from that point forward. The only players who would match or exceed their two year high averages in yards were Coates (year 5), Heap (year 5, year 6), Sharpe (Year 5, Year 7, Year 8), Gates(Year 7), and Gonzalez(Year 8). So out of 50 possible seasons, eight saw players match the numbers posted in the rookie years with Sharpe and Heap the only players to do it twice.

Now I don’t think anyone would expect Graham to continue with these numbers but if he is looking to be a player that “breaks the system” by having a salary that much higher than his peers he needs to keep those numbers where they have been at the top of his game. If he followed the average projection his 5 year expectation would be:

Season

Games

Rec.

Yds.

TD

Year 5

15.4

86

1086

13.0

Year 6

15.8

77

942

11.3

Year 7

12.7

65

862

9.6

Year 8

15.4

78

993

8.9

Year 9

15.3

63

802

9.7

These are certainly terrific numbers and they would pretty much place him in the top three for four of his five years, but I don’t think the Saints would consider this to blow the field away by so much that you can justify an $11 million a year contract. Top of the market, sure, but $2 million more than the next highest paid player? Probably not.

The Age Factor

Graham will turn 28 during the course of the 2014 NFL season. That would make his next contract run until he is the age of 32. That is a very different timeframe than most of the other players. At 28 he is the oldest of this group to enter his fifth season. The average age was just 26.1. Many of the players were either out of the NFL or showing more declines as they got into their 30s. Obviously there are exceptions such as Gonzalez, but it would be somewhat of a concern as it could take a year off his useful football life.

The Leverage Factor

The NFL is a business and between owners looking to maximize profits and in turn maximize chances of winning via strong salary cap management, players like Graham are the ones who fall victim to the system in place. Players who are not drafted highly are not rewarded for strong play during their early careers. Some positions are protected from the Franchise tag, but Graham’s is not. If anything it is one hindered by the tag.

No team in the NFL is going to give up two first round draft picks for a Tight End. Actually, other than a Quarterback I don’t know of any position that a team would give up two first round picks for. Graham is essentially locked in and not in a good way. A few weeks ago we would have considered the tag to severely compromise the salary cap strapped Saints, but with a jump of $7 million over the initial projections the tag pretty much was paid for and with an expected increase of $10 million in 2015 the Saints are big winners.

Provided that the league determines that Graham is a Tight End and not a Wide Receiver his salary under the franchise tag will be $7.035 million. If tagged again the following season it will likely be $8.442 million. For Graham that would equal $15.477 million in salary over two years. As a point of reference Antonio Gates earned nearly $21 million in his first two new money years. So the franchise tag situation is going to cost Graham millions of dollars if he would not come down to a reasonable salary for the position.

Furthermore if things did play out that way you are looking at Graham being ready to turn the corner to 30 when his franchise tag period with the Saints would end. Would he break the bank at that point? Probably not. He would need to earn around least $19.6 million in the 2016 and 2017 years to match Rob Gronkowski’s four year salary on a contract signed in 2012.

The bottom line is Graham is never going to get what he wants if he tries to break the Saints in a contract negotiation. Graham had more leverage before the salary cap increases became known and now that leverage he had looks to be gone. The Saints have everything on their side to get him to take a deal that makes him the highest paid but not by a large margin. The Saints have dug their heels in before and will be expected to do the same here.

One of the biggest name free agents in 2014 will be Tight End Jimmy Graham of the New Orleans Saints. Because of his incredible start to the season, racking up 593 yards in just 4 weeks, he and his pending contract have become discussion points around the league, so we’ll take our look as well at Graham and see what could lie in store.

Statistically Speaking

I think there is a perception around the NFL that Graham had little to gain by having another incredible season this year. I actually agreed with that until running some of the numbers on Graham for the last two years where and comparing them with a number of other “high end” Tight Ends in the NFL over the same time frame. While Graham produced the most yards of any player at the position over the two year period he was also the most targeted player at the position. His numbers were actually behind those of Rob Gronkowski on a per game basis. Here are the two year averages at the position for the top 10 in cumulative yards from 2011 and 2012.

Had Graham been extended before this season I would think it would be arguable about approaching the contract numbers of Gronkowski. Unless the argument is strictly based on games (which is certainly important) Graham would not track as the best in the NFL at the position. That changes for Graham this season.

Graham is on pace for a 118 reception season for a ridiculous 1897 yards. His catch rate is up to nearly 70% and he is averaging 16 yards per reception. With Gronkowski on the shelf with another set of injuries Graham has distanced himself from the field and even if he slows down on the year, he should have done enough to break away from the pack. But if Graham finished the year with 1000-1100 yards I don’t think his leverage would nearly be as high as many people believed coming into the season.

Pushing Beyond the Position

Graham is going to shatter records this year with the type of season he is having which is going to bring up the major question of whether or not Graham should be treated as a Wide Receiver or a Tight End. From a contract standpoint there is a major difference between the two positions. The highest paid Tight End averages $9 million a season. $9 million is less than Miles Austin makes per year with the Dallas Cowboys. So the disparity between the two positions is great. But this is an argument that no player has been able to win in the past. Can Graham?

The current highest ever receiving total for a Tight End is 1,397 yards which was accomplished by Gronkowski in 2011. Graham’s 2011 output of 1,310 yards ranks second all time. Only four players in the history of the NFL have produced more than 1,200 yards at the Tight End position. So the type of numbers Graham is producing are historic, but are they WR contract worthy?

For Graham to be in the conversation we obviously need to make some assumptions. The assumption I will make is that he will finish the year with about 1,540 yards, meaning he’ll produce for 13 weeks this season at his current rate and have three games of no production. This averages out to about 90 yards a game down the stretch of the season which is not unreasonable all things considered.

I want to take the three year averages for Graham and compare them to the top 10 paid receivers in the NFL at the time they signed their contracts. So for Brandon Marshall we will be looking at his 3 year stats from 2007 through 2009 with the Denver Broncos and not with the Dolphins or Bears since those stats had no bearing on the contract he received. I will also include Gronkowski’s numbers for the last three seasons in the mix.

Graham, if he meets the production levels of the assumption, does not just track with the most highly compensated players in the NFL, he exceeds their performance. He ranks 2nd in receptions, 5th in targets, 2nd in yards, 2nd in touchdowns, 3rd in yards per game, 3rd in catch rate, 9th in yards per reception, and 7th in yards per target. Those would be exceptional numbers and he will likely be the first Tight End to produce at this kind of level walking into a contract year (I say likely because Tony Gonzalez possibly could have been in a similar spot back in 2005).

One of the arguments against Graham will likely be the offense that he plays in inflates his stats because of all the weapons the team has at their disposal. While there is some truth to that he is the most targeted receiver on his team the last few years and is the player who should get the most defensive attention on the Saints team. Saints QB Drew Brees does spread the football around so he may not be a number 1 like a Brandon Marshall who has the entire passing game run through him, but it does compare favorably to many on this list including Wallace, Jackson and Harvin.

Perhaps the bigger argument against Graham will be age. Graham, despite so few years in the NFL, will be 28 in 2014. So this is not signing a very young player like Gronkowski who will only be 25 next season. He is going to be looked at as more of a veteran in terms of years ahead of him. Still this is a prime age and the continued success of Witten, Gonzalez, Gates, plus numerous Wide Receivers over the age of 30 should help him fight any such arguments.

The Saints First Move

In hindsight the Saints probably made a mistake not extending Graham this season. Part of that was circumstances as the Saints had, and continue to have, a poor salary cap situation and they decided to try to keep the team intact rather than creating room that could have allowed for an extension that would have been slightly less than the one given to Gronkowski. Now he should surpass Gronkowski by quite a bit. At this point I’m not sure the Saints would even benefit from an extension now rather than next season.

The Saints, despite the cap woes, will apply the Franchise tag to Graham to control his rights next season. This is where Graham will need to argue that he is a WR and not a TE with the League. The Franchise tag for a Tight End is in the ballpark of $6 million compared to $10.5 million for a Wide Receiver. The Saints will need to shave significant salary to be cap compliant in 2014 so that extra $4.5 million is of major importance. Getting the WR designation would also remove the threat of the Exclusive franchise tag as it would be in the ballpark of $14.5 million for a receiver and just $8.5 million for a TE.

Removing that threat is important for Graham, who will not want to play under any tag provisions that will only bring him closer to 30 when true free agency finally begins. In 2012 the Saints applied the Exclusive tag to QB Drew Brees. The two sides fought over a contract until mid-July when the Saints finally gave in to Brees’ desire to earn $20 million a season. Graham’s best contract will come from a situation where he can shop himself around the NFL even at the cost of a number 1 draft pick. If he gets that WR designation the Saints will be in a position where they are forced to negotiate for cap purposes.

I do think that Brees’ contract is also helpful in that Brees was the first player in the NFL to break the $20 million dollar barrier. At the time the highest paid player in the NFL was Peyton Manning at $19.2 million and behind him was Tom Brady at a shade above $18 million. In terms of percentage raise over top of the market that would place Graham somewhere between $9.4 and $9.9 million a year which I would guess would be the absolute least he would take if his played trailed off dramatically over the next 11 games. Graham is superior to Gronkowski at this point so arguing a raise should be simple. At the least Graham should be making it a point to be the first TE to break the $10 million a year barrier the same way that Brees was the guy who broke the $20 million number.

Contract Guesstimates

Now even though the numbers are projected to be exceptional for Graham and he is going to enter a contract period off his best season, dreaming of Fitzgerald/Johnson money is ludicrous. These are players I refer to as “break the system” players in that their salaries are so far above the norms for elite players that they have broken the contract system in place in the NFL.

Last year Calvin Johnson’s contract represented a 67% increase over the 5th highest salary at the WR position. In other words he(well actually Fitzgerald since he was the original huge contract) broke the pay system in place. That number has decreased now (44.7%), but in part that is because Johnson’s and Fitzgerald’s contracts raised the market for the likes of Bowe and Wallace. Other position busters include Adrian Peterson (86.3%, around 65% at time of signing) and Darrelle Revis (64.1%). You have to be a special talent to break the system. The other player who did it would be Chris Johnson, who set the standard a few days before Peterson received his extension from Minnesota. That is really it.

If I am Jimmy Graham I want to break the system. That has to be my goal in this negotiation. While in the worst possible case I may settler for $10 million a year the reality is that I want Graham to be a position buster. Gronkowski failed to do that. His $9 million a year salary represented a 24% increase over the 5th highest paid player at his position. Using this logic helps me avoid the WR vs TE debate. I will agree Graham is a Tight End provided that the Saints agree that he has separated himself apart from the field the way all the others have. I think that is an easier argument to have than first going down the Wide Receiver versus Tight End route.

The two star receivers were unique. They were devastating number 1 targets that could not be replaced and had created a great deal of separation between themselves and the rest of the receivers in the NFL. The two running backs were unique and had were the only non-QB’s in the NFL that teams felt they could build around. Revis, in his prime with the Jets, had no peer. All of these players impacted the game beyond the norms of their position. Graham is that same type of player.

This is not a negotiation about earning “receiver money”. It should be a negotiation about recognizing how great the separation is between Graham and Jason Witten or Jared Cook. The numbers show how superior Graham is to those players. You can compare him to a WR the way Revis could be compared to a pass rusher or Peterson to a QB. Those players could find ways to back that up and so can Graham if he finishes this season over 1,500 yards.

I want to be somewhere around that 65% raise level that most of the others were at the time they signed their contracts. Once Graham is signed the 5th highest contract on the books should be that of Antonio Gates at $7.235 million. That works Graham out to be just under $11.94 million a season. That should be the fair number for him. It will ensure that he is the highest paid Tight End for, most likely, the entire contract.

Graham will probably earn anywhere from 48% to 50% of the contract in the first three years, based on some of the other contracts that we want to use as a guideline. Revis receives 50% over the first three years, though his deal contained no guarantees. Fitzgerald earned nearly 52.5% of the 6 year contract value in his first three new money years while Calvin Johnson and Peterson earned 48%. Chris Johnson’s contract was just 4 years in length so we will throw that one out. Looking at those numbers it’s reasonable for Graham to receive around $34.38 million within the first three seasons of his contract. That number will far surpass the $30 million earned by Gronkowski .

In terms of a first year cash payout we come up with the following: Revis earned 16.7%, Peterson 20.8%, Fitzgerald 34%, and Johnson 29.7%. I think it’s also worth mentioning that Gronkowski earned 22% of his contract in the first year and that the Saints were willing to go to 40% of the contract value for Brees. Knowing that Tight End is not considered a premier position, I don’t think I would touch the WR numbers. Peterson and Revis would be in similar less importance positions and accordingly received much less up front. I think I would be happy hitting the same percentage as Gronkowski, which works out to a payout of $15.76 million in 2014. Regardless, he needs to earn about 34% of his deal in the first two years to keep pace with the “system breakers”.

How to Keep Him on the Saints

Some of the numbers we are talking about are pretty steep. I currently have the Saints estimates around $138 million in 2014 cap commitments. Just to reach the salary cap limits they will need to bring that number down to around $124.5 million. $11.5 million will be created by releasing Will Smith and from there they will need to begin restructuring contracts to get below the salary cap limits and have room for completing their roster. Their cap does not get much better in 2015 either, so Graham is going to need to carry low cap figures in the first two years of his contract.

That will work in Graham’s favor because it is going to require the use of multiple prorated bonuses to artificially lower his cap numbers while keeping the cash outflows high. Though I don’t believe the Saints are a big option bonus team I would imagine that the contract will either contain an option bonus in 2015 or be designed to allow for a conversion of salary to prorated bonus.

My proposed contract structure will contain a minimum salary in 2014 and close to the minimum in 2015. I would use a $15 million dollar signing bonus and a $7.5 million option bonus payable in 2014. I’d have the first two years salaries fully guaranteed with an injury guarantee in 2016. I don’t believe that the Saints would need to go higher than that on the guarantees unless they need to backup the option with a guarantee. Considering the dead money in the deal Graham probably can concede on the paper guarantees. Here would be a proposed contract structure:

And here is how our cash flows will work out:

This is going to be a very player friendly contract that will essentially ensure him of earning those first three seasons. His fourth year is virtually guaranteed unless the Saints choose to designate him a June 1 cut. For that reason I would imagine in this structure a roster bonus of $4-$5 million being in place in 2017 to ensure a quick decision by New Orleans. The high cap figures in 2017 and 2018 should force the Saints into an early extension or a release which at 31 and 32 years old would be a final chance to cash in.

The Saints get the low cap figures in the first two years. Applying an exclusive tag to Graham in 2014 would cost around $8.5 million. Under this proposed deal he is only going to carry $9.33 million in salary cap charges in 2014 and 2015 combined. That is a major benefit for the Saints. The cap structure is flexible enough to keep the June 1 release a possibility in the fourth year so they would have some outs after investing around $34 million in Graham for three years in the event he or the team goes south.

Overall I would think if Graham keeps this pace up he will have an exceptional chance at reaching the numbers discussed here. In the NFL teams will always find a way to keep the players that they feel are irreplaceable and I would be quite surprised if Graham is wearing another uniform at any point over the next few years. I’d expect this deal to be done certainly before the 2014 offseason begins and maybe even this year if the Saints feel that they have unused cap room that can be used towards the contract.

The San Francisco 49ers have traded LB Parys Haralson to the New Orleans Saints according to Matt Maiocco of CSNBayArea.com. The 49ers made it known earlier this week that they were shopping Haralson and the Saints, who have supposedly lost LB Will Smith for the season, were a logical destination.

Haralson, who was injured all of 2012, renegotiated his contract earlier this season to remain with San Francisco. The Saints will take on $1.15 million in salary obligations as well as another $150,000 in per game roster bonuses that could push his cap charge to $1.3 million on the season. New Orleans was just $5.1 million under the cap earlier today so they would seem to be a team that will be right up against the salary cap for most of the season. Haralson also has $400,000 in incentives that he can earn, however that money will not count towards the cap this season.

Terms of the trade were not disclosed but it is possible that compensation could be tied to the Saints re-signing Haralson, who is set to be a free agent after the season. San Francisco will gain around $670,000 in net cap room following the trade.

A few weeks ago Jason LaCanfora published a list of best and worst contracts in the NFL so I thought it might make a good idea for us to do the same here at OTC, with a team by team approach. I’ll try to be a bit more analytical in terms of why money was paid and how it fits in the market, but the general premise is the same. The one key difference is outside of restructured rookie contracts under the old CBA we will only use veteran contracts as there is a big difference between best draft picks and best contracts. Please note that there is a difference between a bad player and a bad contract when discussing some of the selections. Clicking on a players name will take you to his salary cap page.

For as much grief as I give the Saints for the way that they have constructed their salary cap, they do have a number of good contracts on the team. The three that stand out are those of Marques Colston, Darren Sproles, and Junior Galette. I know some had asked me about Brian De La Puente, but because he is on a RFA contract I eliminated him from consideration since there are solid long terms deals on the team as well. So why Galette and not Colston or Sproles?

Colston gives tremendous production for his price tag and he was one of the first “prolific” wide receivers to seemingly get discounted because he lined up a lot in the slot. The tradeoff was some heavier guarantees which in turn make cutting him at any point expensive, which the Saints compounded with a restructure for cap relief this year. So that’s a bit of a negative. Sproles is a dangerous all around threat that the Saints never got tricked into paying too much for and had an easy escape from his deal once he hit 30 if needed. That said he doesn’t have the high level of upside that I think Galette has.

In his brief amount of snaps last season (around 30%) Galette was terrific as a pass rusher. In my own analysis of Pro Football Focus’ stats he was one of the best 43DE’s in the NFL in terms of productivity per play. He ranked third among 43DE’s in that category and while his numbers in such a metric will drop when not simply a pass rush specialist, on this team and in a pass happy division the drop might not be as significant as others. Even with the small amount of snaps he played, the pass rush production was worth a contract worth around $4 million a year. His deal with the Saints is only for $2.5 million per year.

The upside is gigantic with Galette and if he develops into a 600 to 800 snap player, the Saints will have someone on the team carrying a cap figure that is going to be about 1/3 of the production amount. This is the type of deal that allows them to carry the salary for Drew Brees. At worst he remains a pure situational player and he is still a bargain even at this price if he continues to produce at his current rate.

If he doesn’t realize the potential and fails, the contract only cost the Saints $3.5 million for an extended one year look at him in 2013. They can release him next season for just $1.8 million in cap charges or the year thereafter at $900,000. With cap charges never running higher than $2.9 million and the fact that he is only 25 there really should be no need for the Saints to move on anyway. With the deal structured as it is, an extension can be struck at any time if he hits it big to keep him a Saint until he is in his early 30’s at some cap friendly prices. A solid contract for the team.

The Saints are another team with a number of bad contracts. The contracts are not so much overvalued like the Cowboys are or Raiders were nor were they bizarre decisions like those of the Panthers, but more just a tangled mess created by restructures and a resistance from moving on from certain players. I think Roman Harper was a good example of this. Harper really should have simply been cut, but they opted instead to redo his contract with Harper taking a paycut of sorts in 2013 for extension years that ensure his place on the team through 2014, which is probably a mistake. Curtis Lofton’s deal was an example of restructure that has bad future consequences because they needed cap relief to maintain other players.

One of those other players that money was needed to retain was Will Smith. Smith has only produced 12.5 sacks the last two seasons , a low amount considering how often he should be in a position to rush the passer. Whereas Galette was one of the most productive pass rushers per attempt in the NFL, Smith was one of the worst. The same formula estimated his pass rush worth to be $2.3 million. His cap number this year is around $8 million.

2012 is really where it all went wrong for the Saints with Smith. Smith had already passed the age of 30 and had seen his stats fall for two years, following the 13 sack season in 2009. At that point Smith would have cost the Saints $4 million to release, not including the signing bonus forfeiture from his suspension, which drove that cost down even more. Smith’s cap charge that year was going to be around $10 million with $8 million coming in the form of base salary and a roster bonus. Rather than trying to drive the price down due to the cap savings realized by cutting him they rolled all of the maximum amount of the offseason money into a signing bonus.

The decision was not a good one. The team saved nearly $5 million in cap but increased his 2013 dead money from just $2 million to nearly $7 million with a cap charge over $14 million. The Saints did finally push for a paycut in 2013, but by that time the damage was done. Even in reducing his pay from $9 to $3 million Smith still has a cap charge of $8 million this season putting him around the top 15 at the position. When they do release him next season he will still carry over $2 million in cap penalties due to that 2012 restructure.

To quote the great Winston Churchill, Jimmy Graham is a riddle, wrapped in a mystery, inside an enigma. He used his 6’7″ 265 lbs frame to secure a scholarship at the University of Miami- playing basketball. It was only after he graduated from college that he decided to play football for Miami while taking graduate classes. Graham parlayed his 17/213/5 season into a 3rd round selection of the New Orleans Saints in the 2010 NFL Draft.

Along with NFL personnel directors, many fantasy football owners are wondering which Jimmy Graham will be on the field in 2013. He followed up a 2011 line of 99/1310/11 with a somewhat disappointing 85/982/9 2012 season. In baseball, there is a well known fact that the second time though the league, the new player has a much harder time repeating his original success. This is especially true for Joker (or Move) Tight Ends in the NFL. This style of TE provides a special piece in the chess game played by coordinators on Sundays. Once a Joker shows the ability to continually beat opposing LB and SS, usually DCs begin using their Slot CB to defend them. So this is where real GMs and fake GMs differ in their valuation process. Even though Graham’s numbers may have declined, he has opened up opportunity for the other Saints receivers.

The Tight End market in the NFL is between $6M-$7.5M APY for Top-15 TEs. I would imaging that if Graham’s puts up similar numbers to 2011/12 he will become the highest paid TE in the NFL.

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Featured Contract

Drew Brees signed a one year contract extension worth $24.25 million, all of which is guaranteed, on September 7, 2016 with the Saints. Brees, who had been scheduled to earn $20 million in 2016 will now earn $31.25 million, including a $30 million signing bonus per Andrew Brandt. The contract contains three voidable contract years to prorate the signing bonus. The new contract reduces Brees cap number from $30 million to $17.25 million in 2016. Brees has a no trade clause and can not be franchise tagged when his contract voids. If the contract voids and Brees is not extended the Saints will carry a dead money charge of $18 million in 2019 for Brees. The deadline for the void is the final day of the 2017 league year.